UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 6-K
REPORT OF FOREIGN PRIVATE ISSUER PURSUANT
TO RULE 13a-16 OR 15d-16 UNDER
THE SECURITIES EXCHANGE ACT OF 1934
For the month of: November, 2006
Commission File Number: 000-50393
NEUROCHEM INC.
275 Armand-Frappier Boulevard
Laval, Quebec
H7V 4A7
Indicate by check mark whether the registrant files or will file annual reports
under cover of Form 20-F or Form 40 F. Form 20-F [ ] Form 40-F [X]
Indicate by check mark if the registrant is submitting the Form 6-K in paper as
permitted by Regulation S-T Rule 101(b)(1):
Yes [ ] No [X]
Indicate by check mark if the registrant is submitting the Form 6-K in paper as
permitted by Regulation S-T Rule 101(b)(7):
Yes [ ] No [X]
Indicate by check mark whether the registrant by furnishing the information
contained in this Form is also thereby furnishing the information to the
Commission pursuant to Rule 12g-3 under the Securities Exchange Act of 1934.
Yes [ ] No [X]
If "Yes" is marked, indicate below the file number assigned to the registrant in
connection with Rule 12g3-2(b):
SIGNATURES:
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
NEUROCHEM INC.
November 9, 2006
By: /s/ David Skinner
---------------------------------------
David Skinner, Vice President,
General Counsel and Corporate Secretary
Consolidated Financial Statements of
(Unaudited)
NEUROCHEM INC.
Periods ended September 30, 2006 and 2005
NEUROCHEM INC.
Consolidated Financial Statements
(Unaudited)
Periods ended September 30, 2006 and 2005
(in thousands of Canadian dollars)
FINANCIAL STATEMENTS
Consolidated Balance Sheets............................................ 1
Consolidated Statements of Operations.................................. 2
Consolidated Statements of Deficit..................................... 3
Consolidated Statements of Cash Flows.................................. 4
Notes to Consolidated Financial Statements............................. 6
NEUROCHEM INC.
Consolidated Balance Sheets
(Unaudited)
September 30, 2006 and December 31, 2005
(in thousands of Canadian dollars)
(in accordance with Canadian GAAP)
===================================================================================================================
September 30, September 30, December 31,
2006 2006 2005
- -------------------------------------------------------------------------------------------------------------------
(U.S.$ - (Cdn$) (Cdn$)
note 1)
Assets
Current assets:
Cash and cash equivalents $ 24,001 $ 26,769 $ 7,382
Marketable securities -- -- 63,709
Restricted cash (note 3) 6,000 6,692 6,995
Sales taxes and other receivables 852 950 728
Research tax credits receivable 2,761 3,079 2,404
Prepaid expenses and deposits 2,839 3,167 3,171
- -------------------------------------------------------------------------------------------------------------------
36,453 40,657 84,389
Restricted cash 574 640 640
Long-term prepaid expenses and deposits 748 834 1,355
Long-term investment (note 2) 834 930 235
Property and equipment 4,308 4,805 4,911
Patents 5,059 5,642 5,416
- -------------------------------------------------------------------------------------------------------------------
$ 47,976 $ 53,508 $ 96,946
===================================================================================================================
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable $ 3,332 $ 3,716 $ 5,016
Accrued liabilities 10,504 11,715 8,551
Deferred revenue 8,415 9,386 2,429
Deferred gain on sale of property 1,277 1,424 1,424
- -------------------------------------------------------------------------------------------------------------------
23,528 26,241 17,420
Deferred revenue -- -- 8,779
Deferred gain on sale of property 16,757 18,690 19,759
Long-term accrued liabilities 547 610 207
- -------------------------------------------------------------------------------------------------------------------
40,832 45,541 46,165
- -------------------------------------------------------------------------------------------------------------------
Non-controlling interest (note 2) 923 1,030 509
Shareholders' equity:
Share capital (note 4) 242,793 270,793 260,968
Additional paid-in capital (note 4) 11,584 12,920 10,052
Deficit (248,156) (276,776) (220,748)
- -------------------------------------------------------------------------------------------------------------------
6,221 6,937 50,272
Arbitral award (note 7)
Subsequent event (note 9)
- -------------------------------------------------------------------------------------------------------------------
$ 47,976 $ 53,508 $ 96,946
===================================================================================================================
See accompanying notes to unaudited consolidated financial statements.
- 1 -
NEUROCHEM INC.
Consolidated Statements of Operations
(Unaudited)
Periods ended September 30, 2006 and 2005
(in thousands of Canadian dollars, except per share data)
(in accordance with Canadian GAAP)
===================================================================================================================
Three months ended Nine months ended
September 30, September 30,
--------------------------------- ----------------------------------------
2006 2006 2005 2006 2006 2005
- -------------------------------------------------------------------------------------------------------------------
(U.S.$ - (Cdn$) (Cdn$) (U.S.$ - (Cdn$) (Cdn$)
note 1) note 1)
Revenues:
Collaboration agreement
(note 3) $ 544 $ 607 $ 750 $ 1,634 $ 1,822 $ 2,777
Reimbursable costs 152 170 170 542 605 827
- -------------------------------------------------------------------------------------------------------------------
696 777 920 2,176 2,427 3,604
- -------------------------------------------------------------------------------------------------------------------
Expenses (income):
Research and development 12,966 14,461 13,945 38,131 42,529 38,807
Research tax credits and
grants (389) (434) (1,704) (1,312) (1,463) (2,664)
Other research and development
charges 1,145 1,277 - 1,145 1,277 -
- -------------------------------------------------------------------------------------------------------------------
13,722 15,304 12,241 37,964 42,343 36,143
General and administrative 2,727 3,042 6,737 8,832 9,850 17,819
Arbitral award (note 7) -- -- -- 1,873 2,089 --
Reimbursable costs 152 170 170 542 605 827
Stock-based compensation
(note 5) 954 1,064 868 2,686 2,996 3,930
Depreciation of property and
equipment 291 325 552 847 945 1,548
Amortization and write-off of
patents 89 99 79 342 381 228
Interest and bank charges 21 24 126 66 74 380
- -------------------------------------------------------------------------------------------------------------------
17,956 20,028 20,773 53,152 59,283 60,875
- -------------------------------------------------------------------------------------------------------------------
Net loss before undernoted items (17,260) (19,251) (19,853) (50,976) (56,856) (57,271)
- -------------------------------------------------------------------------------------------------------------------
Investment income and other:
Interest income 429 479 591 1,526 1,702 1,475
Foreign exchange loss (22) (25) (1,700) (533) (595) (68)
Other income 551 614 291 1,082 1,207 638
Share of loss in a company
subject to significant
influence (451) (503) (574) (1,981) (2,210) (2,153)
Non-controlling interest 149 166 171 649 724 641
- -------------------------------------------------------------------------------------------------------------------
656 731 (1,221) 743 828 533
- -------------------------------------------------------------------------------------------------------------------
Net loss $ (16,604) $ (18,520) $ (21,074) $ (50,233) $ (56,028) $ (56,738)
===================================================================================================================
Net loss per share:
Basic $ (0.43) $ (0.48) $ (0.58) $ (1.30) $ (1.45) $ (1.65)
Diluted (0.43) (0.48) (0.58) (1.30) (1.45) (1.65)
===================================================================================================================
Weighted average number of
common shares outstanding:
Basic 38,814,360 36,618,807 38,589,402 34,288,153
Effect of dilutive options
and warrants -- 139,817 -- 1,669,024
- -------------------------------------------------------------------------------------------------------------------
Diluted 38,814,360 36,758,624 38,589,402 35,957,177
===================================================================================================================
See accompanying notes to unaudited consolidated financial statements.
- 2 -
NEUROCHEM INC.
Consolidated Statements of Deficit
(Unaudited)
Periods ended September 30, 2006 and 2005
(in thousands of Canadian dollars)
(in accordance with Canadian GAAP)
===================================================================================================================
Three months ended Nine months ended
September 30, September 30,
--------------------------------- ----------------------------------------
2006 2006 2005 2006 2006 2005
- -------------------------------------------------------------------------------------------------------------------
(U.S.$ - (Cdn$) (Cdn$) (U.S.$ - (Cdn$) (Cdn$)
note 1) note 1)
Deficit, beginning of period:
As previously reported $ (231,552) $ (258,256) $ (184,046) $ (197,923) $ (220,748) $ (140,926)
Adjustment to reflect
change in accounting
policy for long-term
investment (note 2) -- -- -- -- -- (2,501)
- -------------------------------------------------------------------------------------------------------------------
Deficit, beginning of period,
as restated (231,552) (258,256) (184,046) (197,923) (220,748) (143,427)
Net loss (16,604) (18,520) (21,074) (50,233) (56,028) (56,738)
Share issue costs -- -- -- -- -- (4,955)
- -------------------------------------------------------------------------------------------------------------------
Deficit, end of period $ (248,156) $ (276,776) $ (205,120) $ (248,156) $ (276,776) $ (205,120)
===================================================================================================================
See accompanying notes to unaudited consolidated financial statements.
- 3 -
NEUROCHEM INC.
Consolidated Statements of Cash Flows
(Unaudited)
Periods ended September 30, 2006 and 2005
(in thousands of Canadian dollars)
(in accordance with Canadian GAAP)
=============================================================================================================================
Three months ended Nine months ended
September 30, September 30,
--------------------------------- ----------------------------------------
2006 2006 2005 2006 2006 2005
- -----------------------------------------------------------------------------------------------------------------------------
(U.S.$ - (Cdn$) (Cdn$) (U.S.$ (Cdn$) (Cdn$)
note 1) note 1)
Cash flows from operating
activities:
Net loss $ (16,604) $ (18,520) $ (21,074) $ (50,233) $ (56,028) $ (56,738)
Adjustments for:
Depreciation, amortization
and write-off of patents 380 424 631 1,189 1,326 1,776
Unrealized foreign exchange
loss 332 370 1,972 1,137 1,268 1,232
Stock-based compensation 954 1,064 868 2,686 2,996 3,930
Share of loss in a company
subject to significant
influence 451 503 574 1,981 2,210 2,153
Non-controlling interest (149) (166) (171) (649) (724) (641)
Amortization of gain on sale
leaseback (319) (356) -- (959) (1,069) --
Changes in operating assets
and liabilities:
Restricted cash -- -- -- -- -- (7,258)
Amounts receivable under
collaboration agreement -- -- -- -- -- 14,443
Sales taxes and other
receivables 321 358 (302) (199) (222) (41)
Research tax credits receivable 301 336 (1,683) (605) (675) (2,495)
Prepaid expenses and deposits 593 661 1,209 3 4 1,071
Long-term prepaid expenses
and deposits 124 139 107 467 521 (86)
Deferred revenue (544) (607) (750) (1,634) (1,822) (2,777)
Accounts payable and
accrued liabilities 1,128 1,258 1,679 2,928 3,266 5,684
- -----------------------------------------------------------------------------------------------------------------------------
(13,032) (14,536) (16,940) (43,888) (48,949) (39,747)
- -----------------------------------------------------------------------------------------------------------------------------
Cash flows from financing activities:
Proceeds from issue of common
shares 179 200 8,769 8,694 9,697 84,280
Share issue costs -- -- -- -- -- (4,955)
Repayment of obligations
under capital leases -- -- (115) -- -- (338)
Repayment of long-term debt -- -- (106) -- -- (396)
- -----------------------------------------------------------------------------------------------------------------------------
179 200 8,548 8,694 9,697 78,591
- -----------------------------------------------------------------------------------------------------------------------------
Cash flows from investing activities:
Additions to property and equipment (139) (155) (282) (589) (657) (1,185)
Additions to patents (268) (299) (207) (1,603) (1,788) (695)
Proceeds from marketable
securities -- -- (21,144) 57,121 63,709 822
Proceeds from disposal of property
and equipment -- -- 3 -- -- 68
Long-term investment -- -- -- (1,488) (1,660) --
- -----------------------------------------------------------------------------------------------------------------------------
(407) (454) (21,630) 53,441 59,604 (990)
- 4 -
NEUROCHEM INC.
Consolidated Statements of Cash Flows, Continued
(Unaudited)
Periods ended September 30, 2006 and 2005
(in thousands of Canadian dollars)
(in accordance with Canadian GAAP)
=============================================================================================================================
Three months ended Nine months ended
September 30, September 30,
--------------------------------- ----------------------------------------
2006 2006 2005 2006 2006 2005
- -----------------------------------------------------------------------------------------------------------------------------
(U.S.$ - (Cdn$) (Cdn$) (U.S.$) (Cdn$) (Cdn$)
note 1) note 1)
- -----------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in cash
and cash equivalents (13,260) (14,790) (30,022) 18,247 20,352 37,854
Cash and cash equivalents,
beginning of period 37,595 41,931 75,727 6,619 7,382 7,207
Effect of unrealized foreign exchange
on cash and cash equivalents (334) (372) (1,585) (865) (965) (941)
- -----------------------------------------------------------------------------------------------------------------------------
Cash and cash equivalents,
end of period $ 24,001 $ 26,769 $ 44,120 $ 24,001 $ 26,769 $ 44,120
=============================================================================================================================
Supplemental disclosure to cash flow (note 8).
See accompanying notes to unaudited consolidated financial statements.
- 5 -
NEUROCHEM INC.
Notes to Consolidated Financial Statements
(Unaudited)
Periods ended September 30, 2006 and 2005
(Amounts in thousands of Canadian dollars, except per share data)
================================================================================
1. BASIS OF PRESENTATION:
These financial statements have been prepared by management in accordance
with Canadian generally accepted accounting principles. The unaudited
balance sheet as at September 30, 2006, and the unaudited statements of
operations, deficit and cash flows for the periods ended September 30,
2006, and 2005, reflect all adjustments which, in the opinion of
management, are necessary for a fair statement of the results of the
interim periods presented. The results of operations for any quarter are
not necessarily indicative of the results for the full year. The interim
financial statements follow the same accounting policies and methods of
their application as described in note 2 of the annual financial statements
for the year ended December 31, 2005. The interim financial statements do
not include all disclosures required for annual financial statements and
should be read in conjunction with the annual financial statements as at
and for the year ended December 31, 2005.
Translation of convenience:
The Company's functional currency is the Canadian dollar. As a convenience
to certain readers, the Company also presents the interim consolidated
financial statements in U.S. dollars using the convenience translation
method whereby all Canadian dollar amounts are converted into U.S. dollars
at the noon exchange rate quoted by the Bank of Canada at September 30,
2006, which was 0.8966 U.S. dollar per Canadian dollar. The information in
U.S. dollars is presented only for the convenience of some readers and,
thus, has limited usefulness. This translation should not be viewed as a
representation that the Canadian dollar amounts in the financial statements
actually represent such U.S. dollar amounts or could be or would have been
converted into U.S. dollars at the rate indicated.
2. CHANGES IN ACCOUNTING POLICIES:
Variable interest entities:
On January 1, 2005, the Company adopted the recommendation of Accounting
Guideline 15, Consolidation of Variable Interest Entities (AcG-15), which
provides guidance for determining when an enterprise consolidates the
assets, liabilities and results of operations of entities that are subject
to control on a basis other than ownership of voting interests (a variable
interest entity (VIE)). This guideline requires the Company to identify
VIEs in which it has an interest, determine whether it is the primary
beneficiary of such entities and, if so, to consolidate the VIE. A primary
beneficiary is an enterprise that will absorb a majority of the VIE's
expected losses, receive a majority of its expected residual returns, or
both. It was determined that the Company's investment in a holding company
that owns Innodia Inc.'s shares (Innodia Holding) meets the criteria for
being a VIE and that the Company is the primary beneficiary of Innodia
Holding. Innodia Holding's only activity is the investment in Innodia Inc.,
which is accounted for using the equity method. The implementation of
AcG-15 resulted in the consolidation of the Company's interest in Innodia
Holding starting January 1, 2005. The effect of the implementation of this
accounting guideline was to adjust the net carrying value of the long-term
investment and the deficit by $2,501 at January 1, 2005. The revised
carrying amounts of the long-term investment and non-controlling interest
at January 1, 2005 were $3,359 and $1,439, respectively.
- 6 -
NEUROCHEM INC.
Notes to Consolidated Financial Statements, Continued
(Unaudited)
Periods ended September 30, 2006 and 2005
(Amounts in thousands of Canadian dollars, except per share data)
================================================================================
2. CHANGES IN ACCOUNTING POLICIES (CONTINUED):
Variable interest entities (continued):
In March 2006, the Company invested an additional amount of $1,660 in
Innodia Holding in connection with a financing by Innodia Inc. Following
the additional investment by the Company and the other Innodia Holding
shareholders, the carrying amounts of the long-term investment and
non-controlling interest were $2,905 and $1,245, respectively. As a result
of the transaction, the Company's indirect equity investment in Innodia
Inc. is approximately 23% of the issued and outstanding shares.
3. COLLABORATION AGREEMENT:
The Company recognized $607 and $1,822 of revenue for the three-month and
nine-month periods ended September 30, 2006, under a collaboration
agreement entered into in December 2004 (2005 - $750 and $2,777,
respectively). These amounts represent the amortization of the
non-refundable upfront payment over the remaining estimated period through
to the anticipated regulatory approval date of the investigational product
candidate.
As required under the terms of the collaboration agreement, the Company has
secured, through a bank, a letter of credit in the amount of $6,692
(U.S.$6,000) in connection with the potentially refundable upfront payment
received under the collaboration agreement. The Company has classified an
equivalent amount of cash as "restricted cash" on the consolidated balance
sheet to reflect the collateralization of the amount of the letter of
credit.
4. SHARE CAPITAL:
(a) The authorized share capital of the Company consists of:
- an unlimited number of voting common shares
- an unlimited number of non-voting preferred shares, issuable in one
or more series
(b) Issued and outstanding:
The issued and outstanding share capital consists of:
===================================================================================================================
September 30, December 31,
2006 2005
- -------------------------------------------------------------------------------------------------------------------
38,690,945 common shares (December 31, 2005 -
37,421,079 common shares) $ 270,793 $ 260,968
===================================================================================================================
- 7 -
NEUROCHEM INC.
Notes to Consolidated Financial Statements, Continued
(Unaudited)
Periods ended September 30, 2006 and 2005
(Amounts in thousands of Canadian dollars, except per share data)
================================================================================
4. SHARE CAPITAL (CONTINUED):
(b) Issued and outstanding (continued):
Changes in the issued and outstanding common shares and additional
paid-in capital for the year ended December 31, 2005 and for the
nine-month period ended September 30, 2006 were as follows:
===================================================================================================================
Additional
paid-in
Number Dollars capital
- -------------------------------------------------------------------------------------------------------------------
Balance, December 31, 2004 30,320,419 $ 175,855 $ 5,765
Issued for cash from public offering (i) 4,000,000 74,495 --
Exercise of a warrant (ii) 2,800,000 8,764 --
Exercise of stock options:
For cash 300,660 1,346 --
Ascribed value from additional paid-in
capital -- 508 (508)
Stock-based compensation -- -- 4,795
- -------------------------------------------------------------------------------------------------------------------
Balance, December 31, 2005 37,421,079 260,968 10,052
Exercise of a warrant (iii) 1,200,000 9,372 --
Exercise of stock options:
For cash 69,866 325 --
Ascribed value from additional paid-in
capital -- 128 (128)
Stock-based compensation -- -- 2,996
- -------------------------------------------------------------------------------------------------------------------
Balance, September 30, 2006 38,690,945 $ 270,793 $ 12,920
===================================================================================================================
December 31, 2005:
(i) On March 9, 2005, the Company completed a public offering for the
issuance and sale of 4 million common shares at a price of $18.62
(U.S.$15.30) per share. The total proceeds of the offering to the
Company were $74,495 (U.S.$61,200). Total share issue costs of
$4,955 were charged to the deficit.
(ii) On July 25, 2005, a subsidiary of Picchio Pharma Inc. (Picchio
Pharma) exercised a warrant to purchase 2.8 million common shares
at a price of $3.13 per share. Total proceeds to the Company were
$8,764.
September 30, 2006:
(iii)On February 16, 2006, Picchio Pharma exercised a warrant to
purchase 1.2 million common shares at a price of $7.81. Total
proceeds to the Company were $9,372.
- 8 -
NEUROCHEM INC.
Notes to Consolidated Financial Statements, Continued
(Unaudited)
Periods ended September 30, 2006 and 2005
(Amounts in thousands of Canadian dollars, except per share data)
================================================================================
4. SHARE CAPITAL (CONTINUED):
(c) Stock option plan:
Changes in outstanding options issued under the stock option plan for
the year ended December 31, 2005 and the nine-month period ended
September 30, 2006 were as follows:
===================================================================================================================
Weighted
average
Number exercise price
- -------------------------------------------------------------------------------------------------------------------
Options outstanding, December 31, 2004 2,363,784 $ 14.51
Granted 318,500 21.31
Exercised (300,660) 4.48
Cancelled or expired (71,666) 13.68
- -------------------------------------------------------------------------------------------------------------------
Options outstanding, December 31, 2005 2,309,958 16.78
Granted 402,000 16.53
Exercised (69,866) 4.64
Cancelled or expired (22,635) 16.96
- -------------------------------------------------------------------------------------------------------------------
Options outstanding, September 30, 2006 2,619,457 $ 17.06
===================================================================================================================
(d) Outstanding warrants at September 30, 2006:
Each warrant entitles the holder to purchase a specified number of
common shares. Changes in outstanding warrant shares issued in
connection with various private placements were as follows:
===================================================================================================================
Number of Weighted
warrant average
shares exercise price
- -------------------------------------------------------------------------------------------------------------------
Warrant shares outstanding, December 31, 2004 4,000,000 $ 4.53
Exercised (note 4 (b)) (2,800,000) 3.13
- -------------------------------------------------------------------------------------------------------------------
Warrant shares outstanding, December 31, 2005 1,200,000 7.81
Exercised (note 4 (b)) (1,200,000) 7.81
- -------------------------------------------------------------------------------------------------------------------
Warrant shares outstanding, September 30, 2006 -- $ --
===================================================================================================================
- 9 -
NEUROCHEM INC.
Notes to Consolidated Financial Statements, Continued
(Unaudited)
Periods ended September 30, 2006 and 2005
(Amounts in thousands of Canadian dollars, except per share data)
================================================================================
4. SHARE CAPITAL (CONTINUED):
(e) Earnings per share:
At September 30, 2006, 1,679,166 options were not considered in the
computation of the diluted weighted average number of shares
outstanding since the exercise price of these options was higher than
the average market price.
Included in the basic weighted average number of shares outstanding are
140,000 common shares to be issued to the Chief Executive Officer upon
formal notification. See note 4 (f).
(f) Agreement to issue shares:
On December 1, 2004, the Company entered into an agreement with the
Chief Executive Officer to issue to him up to 220,000 common shares
upon the execution of the agreement and upon achievement of specified
performance targets. The agreement was approved by regulatory
authorities and shareholders in 2005. During the period ended September
30, 2005, the Company recorded $1,441 in stock-based compensation in
relation to 140,000 common shares to be issued to the Chief Executive
Officer in connection with the execution and achievement of certain
specified targets. The shares will be issued by the Company upon formal
notification by the Chief Executive Officer.
(g) Equity line of credit:
On August 9, 2006, the Company entered into a securities purchase
agreement in respect of an equity line of credit facility. The facility
has a 24-month term and provides the Company with access to financing
of up to U.S.$60,000 in return for the issuance of common shares at a
discount of 3.0% to market price at the time of drawdown. Under the
agreement, the Company is committed to draw down at least U.S.$25,000
over the two-year term of the facility. The agreement is conditional on
the registration of the underlying securities and obtaining the
required regulatory approvals. As of September 30, 2006, the Company
had not drawn any funds under the equity line of credit.
5. STOCK-BASED COMPENSATION:
In the three-month and nine-month periods ended September 30, 2006, the
Company recorded total stock-based compensation of $1,064 and $2,996,
respectively related to stock options granted to employees after July 1,
2002 (2005 - $868 and $2,489, respectively).
The fair value of the options granted was determined using the following
method and assumptions.
- 10 -
NEUROCHEM INC.
Notes to Consolidated Financial Statements, Continued
(Unaudited)
Periods ended September 30, 2006 and 2005
(Amounts in thousands of Canadian dollars, except per share data)
================================================================================
5. STOCK-BASED COMPENSATION (CONTINUED):
The weighted average fair value of each option is estimated on the
effective date of the grant using Black-Scholes pricing model with the
following assumptions:
===================================================================================================================
September 30, September 30,
2006 2005
- -------------------------------------------------------------------------------------------------------------------
Risk-free interest rate 4.18% 3.86%
Expected volatility 60% 58%
Expected life in years 7 7
Expected dividend yield nil nil
===================================================================================================================
The following table summarizes the weighted average grant-date fair value
per share for options granted during the nine-month periods ended September
30, 2006 and 2005:
===================================================================================================================
Weighted average
Number of grant-date
options fair value
- -------------------------------------------------------------------------------------------------------------------
Nine-month periods ended:
September 30, 2006 402,000 $ 10.46
September 30, 2005 311,000 12.78
===================================================================================================================
Dividend yield was excluded from the calculation, since it is the present
policy of the Company to retain all earnings to finance operations and
future growth.
6. RELATED PARTY TRANSACTIONS:
In the three-month and nine-month periods ended September 30, 2006, the
Company incurred fees of $613 and $1,840 under the terms of a management
services agreement entered into in March 2003, as amended in October 2003
and again in December 2004, with Picchio International Inc., a company
related to a shareholder, director and officer (2005 - $600 and $1,800,
respectively).
In 2005, the Company entered into a lease agreement with a company in which
Picchio Pharma has an equity interest. In the three and nine months ended
September 30, 2006, sub-lease revenue under the agreement amounted to $240
and $719, respectively, and is included in "other income" on the
consolidated statements of operations (2005 - $240 and $461, respectively).
- 11 -
NEUROCHEM INC.
Notes to Consolidated Financial Statements, Continued
(Unaudited)
Periods ended September 30, 2006 and 2005
(Amounts in thousands of Canadian dollars, except per share data)
================================================================================
6. RELATED PARTY TRANSACTIONS (CONTINUED):
On February 1, 2006, the Company entered into an assignment agreement with
Parteq Research and Development Innovations (Parteq) (Assignment Agreement)
which terminated an amyloid license agreement. This amyloid license
agreement granted the Company an exclusive worldwide license under certain
intellectual property (Amyloid Intellectual Property). Pursuant to the
Assignment Agreement, Parteq agreed and assigned the Amyloid Intellectual
Property to the Company for consideration comprising an upfront payment of
$200 and various deferred payment amounts, which are approximately equal to
the payments provided for in the amyloid license agreement. The Assignment
Agreement also provides for annual technology payments, deferred milestone
payments and deferred graduated payments based on gross revenues to be
generated from commercialized products, which approximate the payments
included in the amyloid license agreement.
In March 2006, as disclosed in note 2, the Company invested an additional
amount of $1,660 in Innodia Holding, a company in which a shareholder has
an equity interest. In addition, during 2006, the Company entered into an
amendment agreement with Innodia Inc. amending the May 2003 license
agreement, which granted Innodia Inc. an exclusive worldwide license under
certain intellectual property relating to diabetes.
The transactions were recorded at the exchange amount, which is the
consideration established by and agreed to by the parties.
7. ARBITRAL AWARD:
In 2002, the Company executed an agreement (the CTA) with Immtech
International, Inc. (which changed its name, on March 22, 2006, to Immtech
Pharmaceuticals, Inc. and which is referred to herein simply as "Immtech")
of Vernon Hills, Illinois pursuant to which Immtech provided the Company
with certain compounds for testing and granted the Company an option to
license such compounds. In August 2003, Immtech filed certain legal
proceedings with the Federal District Court for the Southern District of
New York, U.S.A., with respect to the CTA. The parties entered into
settlement discussions in September 2003 and, as settlement did not occur,
in January 2004, the Company brought a motion to compel arbitration under
the terms of the CTA. A hearing before the arbitral tribunal (the
Tribunal), convened in accordance with the rules of the International
Chamber of Commerce Court of Arbitration (the ICC), was held in
mid-September 2005. The Tribunal issued its Final Award in early June 2006.
The Tribunal held that Neurochem did not misappropriate any of Immtech's
compounds, information or trade secrets and that Immtech was not entitled
to any interest in, or ownership or assignment of, Neurochem's patent
applications.
- 12 -
NEUROCHEM INC.
Notes to Consolidated Financial Statements, Continued
(Unaudited)
Periods ended September 30, 2006 and 2005
(Amounts in thousands of Canadian dollars, except per share data)
================================================================================
7. ARBITRAL AWARD (CONTINUED):
The Tribunal found that Neurochem had breached certain sections of the 2002
agreement and Immtech was awarded U.S.$35 in damages, plus interest
thereon. Immtech was also awarded a portion of the ICC's administrative
charges and arbitral fees and costs incurred by the Tribunal which had been
previously advanced by Immtech, as well as a portion of Immtech's
arbitration-related legal fees. Those charges, fees and costs amounted to
approximately U.S.$1,830.
On July 10, 2006, Immtech submitted an application in the form of a letter
to the Tribunal and the ICC, seeking further determination under the Final
Award. On July 28, 2006, Neurochem filed a response opposing Immtech's
request for a further determination with respect to ownership of the
Neurochem inventions and pending patent applications. The Tribunal Issued
an Addendum to the Final Award dated September 21, 2006, in which it denied
Immtech's request to make a further determination.
A status conference before the Federal District Court for the Southern
District of New York on the matter of the stayed litigation between Immtech
and two universities, on the one hand, and Neurochem, on the other hand
(the Litigation), is scheduled for mid-November. Despite the outcome of the
arbitral proceedings, the outcome of the Litigation and the amount of loss,
if any, cannot reasonably be estimated. Accordingly, no provision for loss
has been recorded by the Company in connection with the litigation.
8. STATEMENTS OF CASH FLOWS - SUPPLEMENTARY DISCLOSURE:
(a) Cash and cash equivalents:
Cash and cash equivalents consist of cash balances with banks and
short-term investments:
===================================================================================================================
September 30, December 31,
2006 2005
- -------------------------------------------------------------------------------------------------------------------
Cash balances with banks $ 1,772 $ 1,919
Short-term investment yielding interest between
4.29% and 5.20% (December 31, 2005: 3.15% to 4.27%) 24,997 5,463
- -------------------------------------------------------------------------------------------------------------------
$ 26,769 $ 7,382
===================================================================================================================
NEUROCHEM INC.
Notes to Consolidated Financial Statements, Continued
(Unaudited)
Periods ended September 30, 2006 and 2005
(Amounts in thousands of Canadian dollars, except per share data)
================================================================================
8. STATEMENTS OF CASH FLOWS - SUPPLEMENTARY DISCLOSURE (CONTINUED):
(b) Interest:
===================================================================================================================
Three months Nine months
ended September 30, ended September 30,
2006 2005 2006 2005
- -------------------------------------------------------------------------------------------------------------------
Cash paid in the period for:
Interest $ -- $ 99 $ -- $ 311
===================================================================================================================
(c) Non-cash transactions:
===================================================================================================================
September 30, December 31,
2006 2005
- -------------------------------------------------------------------------------------------------------------------
Additions to property and equipment and patents,
included in accounts payable and accrued liabilities
at the end of the period $ 326 $ 1,325
===================================================================================================================
9. SUBSEQUENT EVENT:
On November 3, 2006, the Company entered into a private placement of
U.S.$40,000 aggregate principal amount of 6% senior convertible notes due
in 2026, with a conversion premium of 20%. The Company has granted the U.S.
registered broker-dealer a 30-day option to purchase up to an additional
U.S.$2,085 aggregate principal amount of the notes. The Company will pay
interest on the notes until maturity on November 15, 2026, subject to
earlier repurchase, redemption or conversion. The sale of the notes is
expected to close on November 9, 2006.
- 14 -
MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE
THREE AND NINE-MONTH PERIODS ENDED SEPTEMBER 30, 2006
The following discussion and analysis should be read in conjunction with the
Company's unaudited consolidated financial statements for the nine-month period
ended September 30, 2006, as well as the Company's audited consolidated
financial statements for the year ended December 31, 2005, which have been
prepared in accordance with Canadian generally accepted accounting principles.
For discussion regarding related-party transactions, contractual obligations,
disclosure controls and procedures, critical accounting policies, recent
accounting pronouncements, and risks and uncertainties, refer to the Annual
Report and the Annual Information Form for the year ended December 31, 2005. All
dollar figures are Canadian dollars, unless specified otherwise.
RESULTS OF OPERATIONS
For the three-month period ended September 30, 2006, the net loss amounted to
$18,520,000 ($0.48 per share), compared to $21,074,000 ($0.58 per share) for the
corresponding period last year. For the nine-month period ended September 30,
2006, the net loss amounted to $56,028,000 ($1.45 per share), compared to
$56,738,000 ($1.65 per share) for the same period last year.
Revenue from collaboration agreement amounted to $607,000 for the current
quarter ($1,822,000 for the nine-month period), compared to $750,000 for the
same period last year ($2,777,000 for the nine-month period). This revenue is
earned under the agreement with Centocor, Inc. (Centocor) in respect of
eprodisate (KIACTA(TM) - formerly FIBRILLEX(TM)), an oral investigational
product candidate for the treatment of Amyloid A (AA) amyloidosis. Revenue
recognized is in respect of the non-refundable upfront payment received from
Centocor, which is being amortized over the estimated period through to the
anticipated regulatory approval date of the investigational product candidate.
The estimated period is subject to change based on additional information that
the Company may receive periodically. The other portion of the upfront payment
received from Centocor (U.S. $6,000,000) has been classified as deferred revenue
and is not being amortized as earned revenue given that it is potentially
refundable. In the event that the Company receives an approval letter issued by
the U.S. Food and Drug Administration (FDA), the amount would no longer be
refundable and would be amortized as earned revenue. In August 2006, the Company
received an approvable letter from the FDA for eprodisate (KIACTA(TM)),
following the Company's New Drug Application submitted in February 2006. In this
action letter, the FDA requested additional efficacy information, as well as a
safety update. The FDA stated that this efficacy information would probably need
to be addressed by one or more additional clinical trials. As an alternative,
the FDA also stated that significant findings obtained from a complete follow-up
of patients in the existing study could be persuasive. The FDA asked for further
manufacturing and pharmacokinetic information, and acknowledged that a QT
clinical study should be submitted as part of a Phase 4 (post approval)
commitment. The Company submitted a complete response to the FDA on October 16,
2006. Neurochem is also seeking marketing approval for eprodisate (KIACTA(TM))
for the treatment of AA amyloidosis in the European Union. The
1
Company's Marketing Authorization Application has been validated by the European
Medicines Agency (EMEA) in September 2006, which confirmed that the regulatory
review has started.
Reimbursable costs revenue amounted to $170,000 for the current quarter
($605,000 for the nine-month period), compared to $170,000 for the same period
last year ($827,000 for the nine-month period) and consists of costs
reimbursable by Centocor in respect of eprodisate (KIACTA(TM))-related
activities. The Company earns no margin on these reimbursable costs.
Research and development expenses, before research tax credits and grants,
amounted to $14,461,000 for the current quarter ($42,529,000 for the nine-month
period), compared to $13,945,000 for the same period last year ($38,807,000 for
the nine-month period). The increase in the nine-month period is primarily due
to expenses incurred in relation to the development of tramiprosate
(ALZHEMED(TM)) for the ongoing Phase III clinical trials in North America and
Europe. Tramiprosate (ALZHEMED(TM)) is the Company's investigational product
candidate for the treatment of Alzheimer's disease (AD). The 18-month North
American Phase III clinical trial is expected to be completed in January 2007.
This trial is being conducted in close to 70 clinical centers in the U.S. and in
Canada, with 1,052 mild-to-moderate AD patients enrolled. In September 2005, the
Company launched its Phase III clinical trial in Europe, with 930
mild-to-moderate AD patients expected to participate. The study duration is also
18 months and the trial is conducted in approximately 70 centers in ten European
countries. As of September 30, 2006, 641 patients had been successfully screened
in the European clinical trial, of which 564 were randomized; the remaining 77
patients are expected to be randomized and included in the clinical trial.
Enrollment for the European clinical trial is expected to be completed in the
fall of 2006. The Phase III clinical trials for tramiprosate (ALZHEMED(TM)) are
designed to demonstrate the safety, efficacy and disease-modifying potential of
the product candidate in the treatment of AD. In May 2006, the Company started
an 18-month open-label extension study for patients who have completed the
ongoing North American Phase III clinical trial for tramiprosate (ALZHEMED(TM)).
For the quarter and nine-month period ended September 30, 2006, research and
development expenses also included costs incurred to support the ongoing
eprodisate (KIACTA(TM)) Phase II/III open-label extension study, as well as
ongoing drug discovery programs. The Company expects research and development
expenses to increase in the future as product candidates progress through the
stages of clinical development and as the Company continues to invest in product
research and development.
Research tax credits and grants amounted to $434,000 this quarter ($1,463,000
for the nine-month period), compared to $1,704,000 for the corresponding period
last year ($2,664,000 for the nine-month period). Research tax credits represent
refundable tax credits earned under the Quebec Scientific Research and
Experimental Development Program for expenditures incurred in Quebec. The
decrease is mainly due to additional tax credits recorded during the third
quarter
2
of 2005, claimed in respect to eligible research and development taxable
benefits on stock options for 2005 and prior years.
Other research and development charges amounted to $1,277,000 for the current
quarter. In 2006, the Quebec taxation authorities proposed retroactive changes
in the application of the tax credit program that would deny tax credits on
eligible research and development taxable benefits relating to stock options for
2005 and prior years. Accordingly, management determined that the criteria for
recognition of these credits was no longer met and recorded a provision for
these research tax credits.
General and administrative expenses totaled $3,042,000 for the current quarter
($9,850,000 for the nine-month period), compared to $6,737,000 for the same
quarter last year ($17,819,000 for the nine-month period). The decrease is
primarily attributable to a reduction in legal fees incurred by the Company with
regards to the dispute with Immtech International, Inc. (now known as Immtech
Pharmaceuticals, Inc. and referred to herein as Immtech). See Arbitral award
below.
Arbitral award amounted to $2,089,000 (approximately U.S. $1.9 million) for the
nine-month period and relates to the dispute with Immtech. In June 2006, the
International Chamber of Commerce (the ICC) issued its Final Award (Final Award)
in the arbitration dispute involving Neurochem and Immtech. The dispute concerns
an agreement entered into between Immtech and Neurochem in 2002 (the Agreement)
under which Neurochem had the right to apply its proprietary anti-amyloid
technology to test certain compounds to be provided by Immtech. The ICC denied
the majority of Immtech's claims. On August 12, 2003, Immtech brought claims
against Neurochem in legal proceedings filed with the Federal District Court for
the Southern District of New York, U.S.A. The dispute was presented to an
arbitral tribunal (the Tribunal) convened in accordance with the rules of the
ICC. An evidentiary hearing before the Tribunal was held in September 2005. In
the Final Award, the Tribunal held that Neurochem did not misappropriate any of
Immtech's compounds, information or trade secrets and that Immtech was not
entitled to any interest in, or ownership or assignment of, Neurochem's patent
applications. While the Tribunal found that Neurochem had breached certain
sections of the Agreement, Immtech was awarded U.S. $35,000 in damages, plus
interest thereon. All of Immtech's tort claims were rejected, as were its claims
for injunctive relief and equitable relief; the Tribunal also denied Neurochem's
counterclaims. Immtech was awarded only a portion of the ICC's administrative
charges and arbitral fees and costs incurred by the Tribunal which had been
previously advanced by Immtech, as well as a portion of Immtech's
arbitration-related legal fees. Those charges, fees and costs amounted to
approximately U.S. $1.83 million. On July 10, 2006, Immtech submitted an
application in the form of a letter to the Tribunal and the ICC seeking a
determination by the Tribunal of an issue Immtech asserted the Tribunal did not
decide; specifically, Immtech claimed that certain Neurochem "inventions", and
pending patent applications relating thereto, should be assigned to, and
therefore be owned by Immtech and that the Final Award failed to
3
distinguish between the issue of ownership -- as distinct from the issue of
inventorship. On July 28, 2006, Neurochem filed a response opposing Immtech's
request for a further determination with respect to ownership of the Neurochem
inventions and pending patent applications. The Tribunal issued an Addendum to
the Final Award dated September 21, 2006, in which it denied Immtech's request
to make a further determination. A status conference before the Federal District
Court for the Southern District of New York on the matter of the stayed
litigation between Immtech and two universities, on the one hand, and Neurochem,
on the other hand, (the Litigation) is scheduled for mid-November. Despite the
outcome of the arbitral proceedings, the outcome of the Litigation and the
amount of loss, if any, cannot reasonably be estimated. Accordingly, no
provision for loss has been recorded by the Company in connection with the
Litigation.
Reimbursable costs amounted to $170,000 for the current quarter ($605,000 for
the nine-month period), compared to $170,000 for the same period last year
($827,000 for the nine-month period), and consist of costs incurred on behalf of
Centocor in respect of eprodisate (KIACTA(TM))-related activities and
reimbursable by Centocor.
Stock-based compensation amounted to $1,064,000 for the current quarter
($2,996,000 for the nine-month period), compared to $868,000 for the
corresponding quarter last year ($3,930,000 for the nine-month period). This
expense relates to employee and director stock options, and stock-based
incentives, whereby compensation cost is measured at fair value at the date of
grant and is expensed over the award's vesting period. The decrease in the
nine-month period is attributable to expenses of $1,441,000 recorded in the
second quarter of 2005 in relation to 140,000 common shares to be issued to the
Chairman, President and Chief Executive Officer, pursuant to an agreement signed
in December 2004.
Depreciation, amortization and write-off of patents amounted to $424,000 for the
current quarter ($1,326,000 for the nine-month period), compared to $631,000 for
the same quarter last year ($1,776,000 for the nine-month period). The decrease
results mainly from the sale-leaseback transaction entered into by the Company
in November 2005 in respect of its facilities and campus located in Laval,
Quebec.
Interest and bank charges amounted to $24,000 for the current quarter ($74,000
for the nine-month period), compared to $126,000 for the same quarter last year
($380,000 for the nine-month period). The decrease is attributable to the
reimbursement in November 2005, in connection with the sale-leaseback
transaction, of the long-term debt previously contracted to finance the
acquisition of facilities in 2004.
Interest income amounted to $479,000 for the current quarter ($1,702,000 for the
nine-month period), compared to $591,000 for the same quarter last year
($1,475,000 for the nine-month period). The decrease in the quarter is mainly
due to lower average cash balances and is partially offset by higher interest
rates
4
during the current quarter, compared to the same period last year. The increase
in the nine-month period is mainly attributable to higher interest rates and is
partially offset by lower average cash balances during the current period,
compared to the same period last year.
Foreign exchange loss amounted to $25,000 for the current quarter ($595,000 for
the nine-month period), compared to $1,700,000 for the same quarter last year
($68,000 for the nine-month period). Foreign exchange gains or losses arise on
the movement in foreign exchange rates related to the Company's net monetary
assets held in foreign currencies, primarily U.S. dollars. Foreign exchange
losses recognized during 2006 are mainly attributable to the strengthening of
the Canadian dollar compared to the U.S. dollar during the periods.
Other income amounted to $614,000 for the current quarter ($1,207,000 for the
nine-month period), compared to $291,000 for the same quarter last year
($638,000 for the nine-month period). Other income consists of non-operating
revenue, primarily sub-lease revenue. The increase in the current quarter
includes an amount of $332,000 in respect of the recovery of prior years'
property taxes.
Share of loss in a company subject to significant influence amounted to $503,000
for the current quarter ($2,210,000 for the nine-month period), compared to
$574,000 for the corresponding quarter last year ($2,153,000 for the nine-month
period). Non-controlling interest amounted to $166,000 for the current quarter
($724,000 for the nine-month period), compared to $171,000 for the corresponding
quarter last year ($641,000 for the nine-month period). These items result from
the consolidation of the Company's interest in a holding company that owns
shares of Innodia Inc., for which Neurochem is the primary beneficiary. In March
2006, the Company invested an additional amount of $1,660,000 in that holding
company in connection with a financing by Innodia Inc. As a result of the
transaction, the Company's indirect equity investment in Innodia Inc. is
approximately 23% of the issued and outstanding shares. Innodia Inc. is a
private development stage company engaged in developing novel drugs for the
treatment of type 2 diabetes and underlying diseases.
5
Related party transactions
(In thousand of Canadian dollars)
Three months ended Nine months ended
September 30, September 30,
2006 2005 2006 2005
$ $ $ $
Management services expense 613 600 1,840 1,800
Sub-lease revenue 240 240 719 461
Please refer to note 6 of the unaudited Consolidated Financial Statements for
the nine-month period ended September 30, 2006 for details and additional
related party transactions.
QUARTERLY RESULTS (UNAUDITED)
(In thousand of Canadian dollars, except per share data)
Net loss
per share
Basic and
Quarter Revenue Net loss diluted
- ------- ------- -------- ---------
$ $ $
Year ending December 31, 2006
Third 777 (18,520) (0.48)
Second 813 (20,374) (0.53)
First 837 (17,134) (0.45)
Year ended December 31, 2005
Fourth 837 (15,628) (0.42)
Third 920 (21,074) (0.58)
Second 1,035 (18,694) (0.54)
First 1,649 (16,970) (0.54)
Year ended December 31, 2004
Fourth 327 (15,388) (0.51)
The increase in quarterly net losses year over year is primarily due to
additional investments in research and development as the Company advances its
product candidates through clinical trials. The decrease in the current quarter
net loss compared to the same period last year is mainly attributable to a
reduction in legal fees incurred by the Company with regards to the dispute with
Immtech.
6
LIQUIDITY AND CAPITAL RESOURCES
As at September 30, 2006, the Company had available cash, cash equivalents and
marketable securities of $26,769,000, compared to $71,091,000 at December 31,
2005. The decrease is primarily due to funds used in operations and is partially
offset by proceeds received from the exercise of a warrant in February of 2006
by a subsidiary of Picchio Pharma Inc. (Picchio Pharma).
In addition, on August 9, 2006, the Company entered into a securities purchase
agreement in respect of an equity line of credit facility, with a 24-month term,
that provides the Company up to U.S.$60,000,000 of funds in return for the
issuance of common shares at a discount of 3.0% to market price at the time of
draw downs over term. The agreement provides for an obligation for Neurochem to
drawdown at least U.S.$25,000,000 over the two-year term of the facility. The
agreement is conditional on the registration of the underlying securities and
the required regulatory approvals. As at September 30, 2006, the Company had not
drawn any funds under the equity line of credit.
On February 16, 2006, Picchio Pharma, the Company's largest shareholder,
exercised the warrant previously issued pursuant to a February 2003 private
placement which was otherwise scheduled to expire on February 18, 2006,
generating total proceeds to the Company of $9,372,000 and resulting in the
issuance of 1,200,000 common shares from treasury.
As at October 31, 2006, the Company had 38,701,732 common shares outstanding,
220,000 common shares issuable to the Chief Executive Officer upon the
achievement of specified performance targets and 2,608,670 options granted under
the stock option plan.
The Company believes that its available cash and short-term investments,
expected interest income, potential funding under the equity line of credit,
from potential partnerships, research and licensing agreements, research tax
credits, grants, and access to capital markets should be sufficient to finance
the Company's operations and capital needs for the coming year. However, in
light of the uncertainties associated with the regulatory approval process and
the Company's ability to secure additional licensing, partnership and/or other
agreements, further financing may be required to support the Company's
operations in the future.
SUBSEQUENT EVENT
On November 3, 2006, the Company entered into a private placement of
U.S.$40,000,000 aggregate principal amount of 6% senior convertible notes due in
2026, with a conversion premium of 20%. The Company has granted the U.S.
registered broker-dealer a 30-day option to purchase up to an additional
U.S.$2,085,000 aggregate principal amount of the notes. The Company will pay
interest on the notes until maturity on November 15, 2026, subject to earlier
repurchase, redemption or conversion. The sale of the notes is expected to close
on November 9, 2006.
7
FORM 52-109F2
CERTIFICATION OF INTERIM FILINGS
I, Dr. Francesco Bellini, Chairman of the Board and Chief Executive Officer of
Neurochem Inc., certify that:
1. I have reviewed the interim filings (as this term is defined in
Multilateral Instrument 52-109 Certification of Disclosure in Issuers'
Annual and Interim Filings) of Neurochem Inc. (the issuer) for the
period ending September 30, 2006;
2. Based on my knowledge, the interim filings do not contain any untrue
statement of a material fact or omit to state a material fact required
to be stated or that is necessary to make a statement not misleading in
light of the circumstances under which it was made, with respect to the
period covered by the interim filings;
3. Based on my knowledge, the interim financial statements together with
the other financial information included in the interim filings fairly
present in all material respects the financial condition, results of
operations and cash flows of the issuer, as of the date and for the
periods presented in the interim filings;
4. The issuer's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures for the
issuer, and we have:
(a) designed such disclosure controls and procedures, or caused
them to be designed under our supervision, to provide
reasonable assurance that material information relating to the
issuer, including its consolidated subsidiaries, is made known
to us by others within those entities, particularly during the
period in which the interim filings are being prepared.
Date: November 9, 2006
(signed) Dr. Francesco Bellini
-------------------------------------------------
Dr. Francesco Bellini
Chairman of the Board and Chief Executive Officer
FORM 52-109F2
CERTIFICATION OF INTERIM FILINGS
I, Mariano Rodriguez, Vice President, Finance and Chief Financial Officer of
Neurochem Inc., certify that:
1. I have reviewed the interim filings (as this term is defined in
Multilateral Instrument 52-109 Certification of Disclosure in Issuers'
Annual and Interim Filings) of Neurochem Inc. (the issuer) for the
period ending September 30, 2006;
2. Based on my knowledge, the interim filings do not contain any untrue
statement of a material fact or omit to state a material fact required
to be stated or that is necessary to make a statement not misleading in
light of the circumstances under which it was made, with respect to the
period covered by the interim filings;
3. Based on my knowledge, the interim financial statements together with
the other financial information included in the interim filings fairly
present in all material respects the financial condition, results of
operations and cash flows of the issuer, as of the date and for the
periods presented in the interim filings;
4. The issuer's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures for the
issuer, and we have:
(a) designed such disclosure controls and procedures, or caused
them to be designed under our supervision, to provide
reasonable assurance that material information relating to the
issuer, including its consolidated subsidiaries, is made known
to us by others within those entities, particularly during the
period in which the interim filings are being prepared.
Date: November 9, 2006
(signed) Mariano Rodriguez
---------------------------------------------------
Mariano Rodriguez
Vice President, Finance and Chief Financial Officer